Citigroup raises DP World price target

Dubai, October 28, 2009

Citigroup raised its price target on the stock of Dubai's DP World by 16 cents, and said it expects the government-controlled port operator to seek further terminal concessions and bolt-on acquisitions, afforded by a rapidly de-leveraging balance sheet.

Citigroup, which kept its 'buy' rating on the stock, raised its price target to 66 cents from 50 cents.

On Tuesday (October 27), DP World reported a 6-per cent fall in third-quarter container volumes and said its 2009 results would be in line with market expectations despite a challenging fourth quarter ahead.

While container volume decline slowed in the third quarter, other issues complicate the second half outlook, the brokerage said.

'DPW expect lower storage revenue, some concessions to struggling liner companies and further weakness in non container revenue that will make it an achievement to maintain an EBITDA margin of 38 per cent,' Citigroup said.

Shares of the company were trading at 54 cents by 0916 GMT Wednesday in Dubai. – Reuters